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Vendor Bender How to induce your vendors to lower their prices

Business Start-Ups magazine, May 1998

Problem: You believe you could improve your cash flow ifyour vendors lowered their prices.

Solution: Don't forget, your vendors have businessesto run, too. There are a couple of different financing methods thatmight induce your vendors to lower their prices for you or to helpyou improve your cash flow. Here are some ideas:

  • Fixed price: By buying the vendors' productsoutright and paying for them immediately, you may be able tonegotiate lower purchase prices. There is no risk to the vendors,who receive the payment immediately, thereby improving their cashflow. In exchange, they may very well be willing to lower the totalprices of the products or services you're buying, producing asavings for you.
  • Incentives: If you need to improve your cash flow, youmay find it worthwhile to pay your vendors a little bit more fortheir goods--if the vendors will wait until you have completed yoursales and received payment from your customers for them. Such anarrangement costs you a little more, but it improves your cashflow, while the vendor gains some extra money in exchange fordelaying the due date of your payment.

Excerpted with permission from Roger Fritz's TheSmall Business Troubleshooter (Career Press,$16.99,1-800-CAREER-1).

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